THE BLOG

The GAO Transcripts, Part 18: IPOA Defends PSC Against Memo 17

07/22/2010 05:28 pm ET | Updated May 25, 2011

This is the eighteenth installment of the Government Accountability Office interview transcripts that were prepared pursuant to the July 2005 GAO report "Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers."

Although there is no definitive evidence I assume, given the language about the founders and CEO having Special Forces Military Background and the psychometric tests it gives its employees, that the PSC official being interviewed is from Triple Canopy. In my book Shadow Force I noted that the company conducts a comprehensive battery of psychometric evaluations, including the Profile XT, Wonderlic Personality Test, Short Employment Test Battery, and Inwald Personality Inventory.

One interesting bit raised the issue of cost effectiveness. The interviewee says:

Similar to many other big companies, they do not offer convoy security. ____________ plains that the DOD is not willing to pay the costs of "doing the job right." For example, DOD is currently looking for a PSC to lead a 100 vehicle convoy from Amman to Baghdad for around ____________ contends tha____________ ld not cover the type of protection such a convoy would necessitate.

One wonders if DoD had paid what the company wanted for doing convoy security would it still be considered more cost effective than having regular military forces do it? Hopefully someday the GAO might do a report just on that question.

Command control issues were also a source of confusion as this excerpt illustrates, "____________ also reported that there is some ambiguity within the chain of command following the rollover of contracts to the State Department. While ____________ ts their money from Defense Finance and Accounting Service (DFAS), they do not know who has taken authority of their contract."

Communications issues, as has been noted in previous posts, were also troublesome for PSC. Apparently a PSC almost caused an air strike to be conducted.

____________ ported duplications within the distribution of frequencies in Iraq, which could lead to potentially dangerous situations. In one specific example ____________ ported that had overlapping frequencies with PSC ____________ who required military aid and were requesting an air strike. Had crossed wires not been untangled, ____________ s site might have been bombed at ____________ bidding.

According to the interviewee PSC were not happy with the old Coalition Provisional Authority Memorandum 17 which detailed the registration requirements for PSC. The requirement that most irritated PSC was the part that placed them under Iraqi law. PSC unhappiness over this was never a secret but it is interesting that the Iraqi government audited PSC every six months. If the US State or Defense Department had been able to do the same possibly much of the PSC unpleasantness that happened might have been avoided.

Even more interesting was this; "They believe that companies will begin to "cook their books" in order to avoid potentially higher taxes or bonds."

According to the interviewee, "In order to address these concerns, ____________ has joined International Peace Operations Association (IPOA), an association of military service operator providers who are lobbying Congress to address their concerns with Memorandum 17..."

According to IPOA's website "IPOA is a trade association whose mission is to promote high operational and ethical standards of firms active in the Peace and Stability Industry; to engage in a constructive dialogue with policy-makers about the growing and positive contribution of these firms to the enhancement of international peace, development, and human security; and to inform the concerned public about the activities and role of the industry."

IPOA is perfectly entitled to lobby. As a 501(c)(6) organization, "it may further its exempt purposes through lobbying as its primary activity without jeopardizing its tax exempt status. However, a 501(c)(6) organization that engages in lobbying may be required to either provide notice to its members regarding the percentage of dues paid that are applicable to lobbying activities, or pay a proxy tax."

Finally, in the irony category, the interviewee gave his top PSC picks. Among them was Custer Battles. This was less than three months before the news started coming out about its false billing claims

Standard disclaimer: I have put in ( _____ ) to reflect those words of phrases which have been blacked out in the transcript. I have also put in the underlining as it appeared in the original transcript. As in the transcript, I have left out letters from various words, even when it seems obvious what the word is.

Prepared by: Kate Walker Index: Type bundle index here
Date Prepared: July 29 2004 DOC Number: Type document number here
Reviewed by: Type reviewer name here DOC library name here
Job Code: 350544

Record of Interview
Title Informational Interview with Private Security Contractor
Purpose To gain an inside perspective on the current PSC situation
Contact Method Face to Face
Contact Place GAO HQ, Washington, DC
Contact Date July 27, 2004
Participants ____________ ____________ ____________ ____________
Steve Sternlieb, Assistant Director, DCM
Carole Coffey, Analyst in Charge, DCM
Glenn Furbish, Senior Analyst, DCM
Kate Walker, Analyst, DCM
Ryan Ona, Intern, DCM
John K. Needham, Assistant Director, ASM
Christina Cromley, Senior Analyst, ASM
Bill McPhail, Senior Analyst, ASM
Gary Delaney, Senior Analyst, ASM
William Petrick, Junior Analyst, ASM
Lara Laufer, Senior Analyst, ASM
Judy McCloskey, Senior Analyst, TAT

Comments/Remarks

____________ with us to relate his company's experiences and perceptions as a. private security contractor in Iraq. ____________ provides personal, site, convoy, and area security as well as thread assessments and red teaming. ____________ less than ____________ Its founders and new CEO ____________ have Special Forces military backgrounds and previous security contracting experience. ____________ recently won ____________ contracts with Coalition Provisional Authority (CPA).

The company has 800 employees, composed of roughly one-third U.S. nationals (USN), one-third third country nationals (TCN), and one-third Iraqis or home country nationals (HCN) ________________________ as a "handshake agreement" with the DOD not to recruit active duty personnel. ____________ developed a pay scale according to market pricing. ____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________ ____________ ____________ ________________________ ____________
____________ ____________ ____________ ____________ ____________
has suffered 13 Defense Base Act (DBA) injury claims since entering Iraq. ____________ sets its own training standards. Its employees must complete four weeks on intensive training in the United States, including skill and physical training and psychometric testing ____________ y also has a fixed cost contract.

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____________ solely provides protective detail. Similar to many other big companies, they do not offer convoy security. ____________ plains that the DOD is not willing to pay the costs of "doing the job right." For example, DOD is currently looking for a PSC to lead a 100 vehicle convoy from Amman to Baghdad for around ____________ contends tha____________ ld not cover the type of protection such a convoy would necessitate.

____________ has a number of concerns with the current situation in Iraq. Key issues are: the regulations involved in weapons purchasing and transport, (lack of military backup, chain of command, communication with US military and among private security firms, and industry involvement in regulation decision-making. In addition, ____________ y believes that Memorandum 17 needs to be revised.

____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________
____________ ____________ ____________ ____________ ____________

____________ also reported a lack of military backup and support. In several circumstances, ____________ has called for military assistance and has not received any aid. ____________ also reported that there is some ambiguity within the chain of command following the rollover of contracts to the State Department. While ____________ ts their money from Defense Finance and Accounting Service (DFAS), they do not know who has taken authority of their contract.

Communication problems are another issue plaguing private security companies (PSCs). ____________ ported duplications within the distribution of frequencies in Iraq, which could lead to potentially dangerous situations. In one specific example ____________ ported that had overlapping frequencies with PSC ____________ who required military aid and were requesting an air strike. Had crossed wires not been untangled, ____________ s site might have been bombed at ____________ bidding. ____________ nd after-action report.) In addition to frequency issues, PSC are not communicating with each other or military. Some PSC have attempted to address this communication gap by gathering and distributing intelligence via email list serves, but eventually this effort has only been half-hearted as PSC are wary of indiscriminate information sharing, ____________ ported that PSCs have little faith in sharing information with USG because they fear that it would not be utilized.

____________ concerned with Memorandum 17. They find it to be unclear and poorly written. In addition, they are wary of the Memorandum because it places PSCs under Iraqi law, which has not been ratified. PSC are already starting to experience repercussions from the Memorandum as insurance companies are increasing their premiums to counter the unknown consequences or Iraqi jurisdiction. ____________ s also irritated that they are audited every six months by the Iraqi government. They believe that companies will begin to "cook their books" in order to avoid potentially higher taxes or bonds. ____________ would like to see diplomatic intervention from the United States addressing Memorandum 17. They believe that the Memorandum was largely

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written without industry insight and that it is not logistically feasible given the short time frame within which the Iraqi government is trying to implement it.

The transfer of information relayed to the Iraqi government via weapons cards is another area of interest for ____________ Data from about 3,500 people including names, addresses, security numbers, and date of birth were handed over during the CPA rollover. ____________ concerned that this transfer of knowledge was a breach of the Privacy Act.

In order to address these concerns, ____________ has joined International Peace Operations Association (IPOA), an association of military service operator providers who are lobbying Congress to address their concerns with Memorandum 17 and to improve coordination between private security firms and the military. In addition to ____________ nternational Peace Operations' current members include ArmourGroup, Main Street Supply, PAE, Airscan, ICI of Oregon MPRI, and L-3 Global Services.

____________ is also very concerned about the ____________ They believe that ____________ oes not have enough experience in Iraq and that the contract workload is too heavy for ____________ pabilities.

____________ also offered his opinion of the current top PSC in Iraq:

British Firms:
• Aegis
• Armor Group
• Control Risk Group (CRG)
• Erynis
• Global Risk
• Hart
• Olive
• Pilgrims

US Firms:
• Blackwater USA
• Custer Battles
• Diligence
• DynCorp
• SOC
• SMG
•Triple Canopy

South African Firms:
• Meteoric Tactical Solutions

Page 3 Record of Interview